Puerto Rico Bonds Are Collapsing

With all eyes focused on Greek ATM lines, collapsing Chinese ponzi schemes, and European bank implosions, one could be forgiven for forgetting about another crisis occurring closer to home. As we detailed here, Puerto Rico is now "in a death spiral" and PR bonds are collapsing this morning...
"Surprise"


Puerto Rico's debt is nearly half that of California for a population one-tenth the size... (via WSJ)


As we explained previously,
What happens next is unclear: "Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo that, like the debt crisis in Greece, could take years to sort out."
So without the "luxury" of default, what is PR to do? Why petition to be allowed to file Chapter 9 naturally: after all everyone is doing it.

 

 

In Washington, the García Padilla administration has been pushing for a bill that would allow the island’s public corporations, like its electrical power authority and water agency, to declare bankruptcy. Of Puerto Rico’s $72 billion in bonds, roughly $25 billion were issued by the public corporations.

Some officials and advisers say Congress needs to go further and permit Puerto Rico’s central government to file for bankruptcy — or risk chaos.

“There are way too many creditors and way too many kinds of debt,” Mr. Rhodes said in an interview. “They need Chapter 9 for the whole commonwealth.”

García Padilla said that his government could not continue to borrow money to address budget deficits while asking its residents, already struggling with high rates of poverty and crime, to shoulder most of the burden through tax increases and pension cuts. Where have we heard that before...

 

 

He said creditors must now “share the sacrifices” that he has imposed on the island’s residents.

“If they don’t come to the table, it will be bad for them,” said Mr. García Padilla, who plans to speak about the fiscal crisis in a televised address to Puerto Rico residents on Monday evening. “What will happen is that our economy will get into a worse situation and we’ll have less money to pay them. They will be shooting themselves in the foot.”

And the punchline:

 

 

“My administration is doing everything not to default,” Mr. García Padilla said. “But we have to make the economy grow,” he added. “If not, we will be in a death spiral.”

And this one: any deal with hedge funds, who are desperate to inject more capital in PR so they can avoid writing down their bond exposure in case of a default, "would only postpone Puerto Rico’s inevitable reckoning. “It will kick the can,” Mr. García Padilla said. “I am not kicking the can.”
We wonder how long before Tsipras, who earlier was quoting FDR, steals this line too.
And speaking of Prexit, how long before Puerto Rico exits the Dollarzone... and will there be a Preferendum first or will the governor, in his can kick-less stampede, just make a unilateral decision to join Greece, Ukraine, Venezuela and countless other soon to be broke countries in the twilight zone of Keynesian sovereign failures?

Video: BRICS Bank panel hosted by RT and SPIEF

RT and SPIEF have jointly held a panel discussion titled ‘THE NEW DEVELOPMENT BANK: A STRONGER ROLE FOR BRICS IN THE GLOBAL FINANCIAL …

The human cost of Greek crisis: 26% unemployment, 30% below poverty line, 17% can’t feed family, 3.1m no health cover

On a steep, gardenia-scented street in the north-eastern Athens suburb of Gerakas, in one corner of a patch of bare ground, stands a small caravan.
Plastic mesh fencing – orange, of the kind builders use – encloses a neat garden in which peppers, courgettes, lettuces and beans grow in well-tended raised beds. Flowers, too.
The caravan is old, but spotless. It is home to Georgios Karvouniaris, 61, and his sister Barbara, 64, two Greeks for whom all the Brussels wrangling over VAT rates, corporation tax and pension reforms has meant nothing – because they have nothing, no income of any kind.
Next Sunday’s referendum – which, if the country stays solvent that long, will either send Greece back to the negotiating table with its creditors or precipitate its exit from the eurozone – is unlikely to affect them much either.
“I do not see how any of it will change our lives. I have no hope, anyway,” said Georgios, sitting in a scavenged plastic garden chair beneath a parasol liberated from a skip.
After seven years of a crisis that has left 26% of Greece’s workforce unemployed, 30% of its people below the poverty line, 17% unable to meet their daily food needs and 3.1 million without health insurance, it is hard to see how anything decided in Brussels or in Athens in the coming week will do much to change the lives of a large number of Greeks any time soon.
“Those that were already on the margins have been pushed right to the very, very edge, and those who were in the middle have been pushed to the margins,” said Ioanna Pertsinidou of Praksis, a charity that runs day centres for vulnerable people and offers legal and employment advice.
“So many people – ordinary, low-to-middle income people with jobs and homes and their lives on track – have seen their lives go drown the drain so fast,” Pertsinidou said. “People who never dreamed that one day they would not be able to pay their electricity bill, or feed their children properly.”
http://www.theguardian.com/world/2015/jun/28/the-greeks-for-whom-all-the-talk-means-nothing-because-they-have-nothing

Will distance from Greece save U.S. markets?

They say the only insulator against a magnetic force is distance. So is the United States far enough away from the pull of overseas financial calamity to remain safe?

Greece – on the cusp of default and a banking crisis - is pretty far away. China, where stocks have dropped more than 20% in weeks despite central bank rate cuts, is even more distant. Puerto Rico is just offshore, but the reality of its heaving debt load has been with us for so long that a leader calling them “not payable” doesn’t cut too close.

The means by which faraway market storms come to whip around U.S. stock prices is some form of contagion. This can occur when basic global banking and capital-market function is disturbed, or when many of the same people who own the collapsing assets also own stuff here and need to sell it to raise cash.

With Greece’s dire debt situation a drawn-out story that’s been with us for half a decade, its effects now seem largely sequestered from markets here.

China’s unstable yearlong market melt-up followed by the rapid panicky selloff is unnerving, and raises questions about the authorities’ ability to manage the economy and markets there. But the S&P 500 index (^GSPC) here has been largely flat over the past year as Shanghai stocks (000001.ss) doubled, so it’s hard to see why American stocks would feel much pain when they didn’t share in the pleasure.

Indeed, as noted here recently, the U.S. stock market has been where global volatility has gone to die this year, with large-cap indexes behaving almost as a sort of safe haven in a skittish world.

Aside from the sharp reflexive drop in European stock markets led lower by the banks and a shallow pullback in the value of the euro, the damage has so far been slight outside of Greece itself (where banks and markets are closed).

For now, relative calm in the market for Spanish government bonds – another “peripheral” market often lumped with Greece – seems to show that investors aren’t yet extrapolating much from Greece’s vulnerable limbo state.

The overnight drop in stock futures threatens to push the indexes below the lower end of their narrow recent range, but so far the break hasn’t been decisive.
Get the Latest Market Data and News with the Yahoo Finance App
It may be that the main effect for most U.S. investors will be to stress test a few key market trends that have been in play for months now.

-The first is the powerful outperformance of European stocks versus the U.S. Central-bank stimulus in Europe has helped drive equities on the Continent (^STOXX) up more than 13% this year, versus about 2% for the S&P 500. U.S. investors have chased this outperformance by shifting hundreds of billions of dollars into European funds. The Greek endgame should be a gut check for the crowded “everybody loves Europe” trade.

-The next strong pattern that will be challenged is the steady rise of Treasury yields. The ten-year yield (^TNX) has been marching upward with impressive momentum for two months and closed Friday near a nine-month high at 2.48%. The flight to safety response over the weekend knocked the yield back below 2.35%, as German government yields likewise sank hard.
Aside from the fear spasm, the Greek turmoil will also complicate forecasts for when the Federal Reserve might raise interest rates, which was one factor pulling Treasury yields higher.
-Within the stock market, the yield lift was a boon to bank stocks, which have been among the strongest performers as net-interest spreads widened. They’ve become arguably an over-loved group. Watch for profit-taking in the big New York and regional banks.

-The Nasdaq (^IXIC) has been the true standout all year, up more than 7%. It’s as if the technology giants that dominate this index have taken on the role of financially sturdy, steadily growing entities so scarce in the world. Look for this bit of market anxiety to challenge – or prove out – the favored status of multinational growth companies largely immune to debt drama and wiggles in economic growth.

There’s a jokey line going around about how Apple should simply use its $180 billion in spare cash to buy Greece. While absurd and rather disrespectful to Greece, the idea has a kernel of truth about the entities that truly have financial staying power in today’s world.

Greek 10Y Bonds Collapse - Yield Tops 15%

Greek stocks may be closed and the bond market super-illiquid but traders are willing to dump GGBs at almost any price for now. 10Y Greek government bonds are spiking over 400bps and have topped 15% for the first time since December 2012.



Charts: Bloomberg

Greece May Not Even Have The Funds To Conduct A Referendum

With Europe making it very clear that unless Greece folds in the next 48 hours, there will be no deal on which the Greeks will be conducting their "Greferendum" as Greece will be programless after June 30, there has been ample confusion about just what the wording of the ballot will be to which the Greek population will say Nai or Oxi. As the following latest snapshot confirms, even the Greek side is rather confused and is now essentially telling people to vote on a deal that was proposed once (on June 25) and may or may no longer be relevant.

This takes place even as moments ago Germany's minister for economic affairs Sigmar Gabriel explained just what a No vote would entail:

• GERMANY GABRIEL: GREEK NO VOTE A VOTE FOR EURO AREA EXIT

Even though there was clearly some confusion as the push to set the narrative begins:

• MERKEL SAYS NONE OF US WANT TO TELL GREEK PEOPLE HOW TO VOTE

A clear lie as just moment prior we got this:

• JUNCKER: I WOULD LIKE TO ASK GREECE TO VOTE 'YES'

Of course, Greece is quite aware of this, and it doing all it can to push voters in the desired direction as the front page of Syriza's newspaper today reveals...

... but at this point there is no alternative: since the bluffing game had to be taken beyond the point of no return and both Greece and the Troika have to last it out until the weekend.
However, the problem for Greece may not be one of wording or even maintaining the "game theory" bluff until the very end, but a far simpler one: not having the funds to actually conduct it!
According to Germany's FAZ, "the Greek Court also estimates that the referendum will cost around 110 million euros, according to a well-informed policy analyst. Money that in view of the strapped Greek Checkout simply will not be there, even if the country saves a EUR 1.6 billion full-scale default to the International Monetary Fund this Tuesday."
Furthermore, the Athens Chamber of Commerce added there is no paper to print some 20 million requred ballots!
So a question emerges: if indeed Greece is unable to fund a referendum will it be stuck with mailed-in responses? And how long would it take to tabulate those votes: 3 weeks, 3 months? Needless to say, the cash-based Greek economy, with its €60/day daily allowance of ATM will not survive nearly that long, something the government hopefully realizes as the next wave of anger will promptly turn away from the Troika once the natitonalistic passion has died down and refocuses on the local government itself...

Central Bank of Central Banks Says “The World is Unable to Fight Next Global Crash”

According to the Bank of International Settlements (BIS), the shadowy “central bank of central banks,” the world as it stands is incapable of combating another global financial crash – a crash that there is every reason to think is coming.
That’s because the economy remains in the hands of the Federal Reserve and other central banks. The financial wizards in THIS VIDEO went so far to say that “we are all slaves to the central banks.” It wasn’t exactly hyperbole.
According to the BIS, central banks have already “used up their ammunition” by driving interests to below zero, freezing investment for the important stuff like production and infrastructure, and instead fueling huge bubbles for wonder kids on Wall Street to play in.
Now, everything is basically teetering on the edge until the music stops. According to the BIS, it will soon be time to pay the piper – as “persistent ultra-low rates” are poised to unleash destruction upon the economy like King Kong set loose on Manhattan:

The BIS report described the threat of a new bust in advanced economies as a “main risk”, with many reaching the top of the economic cycle.
The economies worst hit by the last crisis are now suffering the costs of persistent ultra-low rates, the organisation said, which could “inflict serious damage on the financial system”, sapping banks and weakening their balance sheets and their ability to lend.

And worse, the advanced countries will be unable to fight back against the serious consequences, according to their 2015 annual report :

• The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises.

• Central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

• Central banks may have contributed [to the coming crisis] by fuelling costly financial booms and busts and delaying adjustment.”

In past years, the BIS has painted a clear picture of the bleak financial landscape brought on by central bank policy since the 2008 crisis.
.  .  .  .  .  .
It warned in 2013 that:

Fresh action from central banks to kick-start growth may do more harm than good, by distorting financial markets and jeopardising stability.
“Unfortunately, central banks cannot do more without compounding the risks they have already created.” (source)

.  .  .  .  .  .
In 2014, it found that central banks have failed to achieve a recovery, and are incapable of doing so:

Robust, self-sustaining growth still eludes the global economy… Central banks cannot solve the structural problems that are preventing a return to strong and sustainable growth.
“Most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect.”
“What central bank accommodation has done during the recovery is to borrow time … But the time needs to be used wisely, as the balance between benefits and costs is deteriorating.” (source)

Given the unique insider position of the Bank of International Settlements in the global financial power structure, these are foreboding words to be met with mature concern. This is a tacit admission that the powers that be know the next big crisis is around the corner, and they are ready to watch us drown in it – this time, without reaching down to offer us up.

California Drought So Bad, Neighbors Stealing Water From Each Other

by Daniel Barker,  

There is simply no commodity on the planet more precious than water. Without it, life as we know it cannot exist. The human body can go without water for only three days at the most before death occurs.side from the essential survival aspects, we also depend on water for many other things, such as bathing, watering our lawns and gardens, washing our clothes, and a number of other daily activities. Everyone knows this, but access to clean water is something most of us have taken for granted.owever, that is beginning to change, particularly in the Southwest region of the United States, where a drought period that has lasted for more than a decade has become a massive problem. In California, Nevada and Arizona in particular, millions of people are being affected. Experts say that the problem will only worsen over the coming years.cientists say that the current drought period is the worst the region has endured in more than 1,200 years. The 20th century was the wettest in more than 1,000 years, but now it’s a completely different story. While the sprawling metropolitan areas in the region such as Las Vegas, Phoenix and Los Angeles were expanding during the last century, no one foresaw the dangerous crisis these cities are now facing.ore than 40 million people in the Southwest, including those in southern California, depend on the water that flows into Nevada’s Lake Mead from the Colorado River. Lake Mead was formed when the Hoover Dam was built in the 1930s, and the lake’s water levels are now at their lowest since the dam was created.n California, mandatory water restrictions are already in effect, but these restrictions are far from being enough to fix the state’s water crisis. If the water levels in Lake Mead continue to drop — a very likely scenario — the water restrictions will be even more widespread, and it’s entirely possible that millions of people will eventually be forced to relocate.he problem is only going to get worsehe current drought period has been termed “the greatest water crisis in the history of the United States,” and we are now approaching “megadrought” status, according to scientists.n the hardest-hit areas of California, there have already been numerous reports of water theft. Some of these incidents have involved water theft on a large scale, such as in the Sacramento-San Joaquin Delta, but there have also been many cases of neighbors stealing water from each other.

hese water theft incidents are likely to increase, and the collective mood is likely to get even uglier in the very near future. “Water wars” have begun to erupt between landowners and authorities, farmers and other farmers, and even among ordinary citizens. It seems there is already a black market for stolen water.

Monday Market Meltdown – Greece is so Bad we’re Ignoring China! I LOVE A GOOD DISTRACTION!

by Phil
I love a good distraction! One of the great things about being good at forecasting the Futures is that we were not only 100% prepared for Greece to melt down (our Short-Term Portfolio was already up 152% as of Friday’s close) but we’re already done talking about it and looking ahead to the much bigger Financial crisis in CHINA!!!
If you are a typical short-term, short-sighted, impatient investor (they kind we make money off every day), now is a good time to click away and look for someone to explain to you what’s going on in Greece.  I liked Felix Salmon’s “I Haven’t Been Paying Attention. What’s Going On In Greece?” enough to send it to the 1,000 people who asked me that this weekend.  Greek markets are closed today (and will be all week along with the banks) but the Greek ETF (GREK) is trading and will open down 15-20% by my estimation.
image: http://www.finviz.com/fut_chart.ashx?t=ES&p=m5&s=m&rev=635711594173392158
As I said, I’m bored with Greece, we discussed it all weekend (and all year, and all month) in Member Chat, so you can catch up HERE, and we already played our strong bounce lines in the Futures and took our profits at:

• Dow (/YM) 17,670
• S&P (/ES) 2,075
• Nasdaq (/NQ) 4,430
• Russell (/TF) 1,264.20

Those are the strong bounce lines per our fabulous 5% Rule™ and we were able to predict them last night at 6pm, when the market opened and I tweeted out our long ideas as well as the exits and even used Seeking Alpha’s Stock Talks to make sure all my readers got a chance to play.  Now it’s time to look at CHINA!!!, where the bi-weekly emergency measures to prop up their markets have already FAILED this morning.  As I said on Friday in “Let’s Ignore China (again) and Terrorism Today!“:

At $47.75, FXI should open lower this morning and we do expect China to step in with more stimulus but the Aug $45.50 puts at $1 are still a fun way to play if you don’t like complex spreads and, if China does stimulate and FXI pops higher, THEN we can adjust it and roll it to higher Sept puts because NOTHING they do can really stop this market from making a serious correction, at least to that $44 line ($1.50+ on the options, up 50%) and possibly the $40 line ($5.50, up 450%) – it’s just a matter of when (or should I say Wen?!?  Get it, Wen.. that’s the Premier’s name – Wen!  Ouch, tough room…).

image: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/06-overflow/20150628_china2.jpg
I was hoping that FXI would open higher this morning and we’d have a chance to double down at a lower price after China announced over the weekend after China cut both the lending rate by 0.25% AND lowered the reserve requirements for banks by 0.25%, effectively doubling their usual bi-weekly $85Bn cash injection in an attempt to stop the 20% slide in their indexes.  It worked – for about 30 minutes, as the Chinese markets opened up 4% but, over the course of the session, they plunged back to new lows, ending down about 3% for the day, 7% down from the open in another disastrous session.

“The government appears eager to maintain a bull market to expand the capital market and reduce reliance on bank lending,” wrote Standard Chartered economists in reaction to the cuts.  “Although the use of monetary policy for that purpose is questionable.”

image: http://i1239.photobucket.com/albums/ff507/montys55/reaganomics-republicans-trikle-down-economics-political-poster-1294154060.jpg
Hmm, I wonder if we can think of any other countries where the Central Banks have been eager to maintain a bull market by dumping FREE MONEY on the investing class?  I know I sound like a real party-pooper when I keep hammering on those boring old Fundamentals but, in the end, we do have to face reality.  Printing money and handing it to Corporations and the Top 1% who own them does NOTHING for the real economy.

The Chinese rally has had no such effect. Even as stock markets saw their net capitalisation increase by $7.6Tn in 12 months, from $3.9Tn to $11.5 trillion – larger that the country’s ENTIRE Gross Domestic Product in 2014 – retail sales figures have declined steadily, and business investment has stayed weak.  I’m sorry for all the people I got into arguements with when I said that the market rally simply wasn’t sustainable but – you are all idiots and I had to straighten you out.  8)

So much of China’s current GDP growth is wrapped up in false increases in market wealth (it’s only paper gains and, when you try to cash it in, the market collapses because that much money simply does not exist to cover the fake market gains) that the (so far) 20% correction in the Chinese markets is $2.5Tn and that is going knock at least a percentage off their GDP, which will then panic investors further, etc, etc.
image: http://pbs.twimg.com/media/CIpS-trUcAAtt8Z.jpg
And don’t forget the margin debt (see my 6/15 note).  What idiots lent out that kind of money to people who were buying Chinese stocks AFTER they already gained 100% in a year?  I guess the PEOPLE will have to suffer because the Banksters who collected huge fees for financing this bubble will now need to be bailed out as it implodes on them.

EU chief feels 'betrayed' over Greek debt talks

European Commission President Jean-Claude Juncker has said he feels betrayed by Alexis Tsipras', the Greek prime minister, suprise call for a referendum last weekend and said that "playing one democracy against 18 others is not an attitude worthy of the great Greek nation".
After months of good relations with Tsipras as the bailout negotiations dragged on, Juncker turned against the Greek leader on Monday, complaining that "egotism, tactical games, populist games" took over from cool-headed economic analysis.
The Greeks will vote on reforms that the country's creditors had proposed in exchange for loans. However, the deal is, in reality, is no longer on the table, adding to the confusion around the referendum.
Juncker said that ahead of the vote "it would be advisable to the Greek government to tell the truth to the Greek people instead of simplifying its own message to a 'no-message," the AP news agency reported.
Also speaking on Monday, German Chancellor Angela Merkel said that if Greece wants to resume talks after its referendum, "we will of course not refuse such negotiations."
Merkel said that Europe can only function if it is ready to compromise and "no one can get 100 percent."
She said that the "generous offer" made by creditors "was our contribution to a compromise" and the will to reach one was not there on the Greek side.
The chancellor said there will be a debate on Greece in the German parliament on Wednesday.
Stock markets hit

Analysis: Who is to blame for Greece's debt crisis?

In a television address on Sunday, Tsipras announced the temporary closure of banks, after the European Central Bank (ECB) said it would not increase additional emergency funding to the country.
Tsipras said that the government would also start imposing capital controls ahead of a looming deadline on Tuesday.
In addition, Greece announced on Monday that the country's stock market will remain closed until July 7.
The country needs to make a $1.8bn payment to the International Monetary Fund by Tuesday or risk defaulting on its obligations.
The emergency measures were agreed at a cabinet meeting after a gathering of Greece's systemic stability council, called after eurozone finance ministers refused to extend its bailout beyond Tuesday.

We Are All Greeks!

Europe Only Has a Future With the New Silk Roady  
Helga Zepp-LaRouche,  LaRouche PAC:

Dear Citizens!t’s not Greece which has failed, but rather Chancellor Merkel, Finance Minister Schäuble, the EU Commission, the European Central Bank, and the IMF. Why should the Greek government stick with the austerity measures demanded by the EU, which have already reduced the Greek economy by a third, lowered the birth rate, raised the death rate, and increased youth unemployment to 65%? A policy that even the IMF had to admit was completely incompetent, and that the UN expert on debt and human rights condemned as a clear violation of human rights? Greek Prime Minister Alexis Tsipras’s decision not to capitulate to the “shock and awe” method of the Eurogroup’s Shylocks is not only correct, but offers the chance for all of Europe to break with the insanity of the casino economy, which only serves the interests of the banks and speculators—provided however, that Germany and other countries find the courage to mobilize Europe’s moral and intellectual strengths.f panic now breaks out on the financial markets and the European economy collapses, Greece will not be to blame, but rather the fact that the entire trans-Atlantic system is hopelessly bankrupt. Instead of using the threatened meltdown around the bankruptcy of Lehman Brothers and AIG in September 2008 to regulate the banking system and to ban speculative excesses, a gigantic redistribution took place, transforming private gambling debts into public debts, and the taxpayers had to pay for the bailouts. In the case of Greece, only 3% of the bailout funds stayed in the country, while the rest flowed back into the European banks, allowing the speculators to dance even more wildly around the Golden Calf. The reality is that the trans-Atlantic banks, which are supposedly “too big to fail,” are 40% larger today than they were in 2008, and the total of derivatives amounts to something approaching $2 quadrillion. And that is exactly what could disappear into thin air in an uncontrollable crash, in a “Grexit” [exit of Greece from the Eurozone—ed.].ust in time for the explosion of the crisis, the Bank for International Settlements (BIS) announced in its annual report that the world has no defense for the next financial crisis, since the central banks have already fired off all their ammunition. They even outmaneuvered themselves, since with their repeated interest rate cuts, they created all the preconditions for the next crash. In fact: “The game isch over, Mr Schäuble—but not for Greece, but for their own failed policies!”hat is precisely why the Greek government’s proposal for a debt conference—not only for Greece, but for all of Europe—is absolutely on the mark. A drastic debt “haircut,” in tandem with the introduction of a Glass-Steagall two-tier banking system on both sides of the Atlantic, must put an end to the casino economy. In its place, we need to establish a credit system, similar, for example, to the Kreditanstalt für Wiederaufbau [Reconstruction Finance Agency], which was created after World War II to finance the real economy, generating the German “economic miracle.” Without such a fundamental reorganization of the financial system—i.e., continuing with “bailouts” or “bail-ins” ad nauseum (the Cyprus blueprint of Eurogroup head Jeroen Dijsselbloem)—the impact on the savings of every citizen in Europe and the United States will be very much worse than what the Greek population is enduring today. Solidarity with Greece is the best thing you can do for yourself and for your own future!here is a very real and immediate way out of this crisis: The “win-win” strategy offered by China, i.e., cooperation to build the New Silk Road, the so-called “One Road, One Belt” policy, which President Xi Jinping proposed at the APEC summit in Beijing last October to President Obama and the heads of other major countries, provides a real prospect for overcoming the evil of geopolitics. In the West, China’s New Silk Road policy was virtually ignored for nearly two years; now the realization is belatedly dawning, that this revival of the ancient Silk Road has picked up incredibly impressive momentum. It represents a dynamic that one could only describe as “A Grand Design in Action.” Along with the Asian Infrastructure Investment Bank (AIIB) and the new financial institutions of the BRICS countries [Brazil, Russia, India, China, South Africa], a parallel economic and financial system has evolved in the last two years, based on exactly the same economic principles as the American System of Alexander Hamilton, Friedrich List, Otto von Bismarck, and the German economic miracle in the post-war period.he EU-China Summit on June 29 could be the beginning of such cooperation. China has already expressed its interest in generous investments in European infrastructure projects, and European Commission President Jean-Claude Juncker announced that the EUR 315 billion investment plan of the European Fund forStrategic Investments (EFSI) so far has no investors to provide a real capital line for it. In its preparations for the summit, China expressed great interest in cooperating with this Fund for the implementation of the New Silk Road. Thus, the 2012 program of the BüSo [Civil Rights Solidarity Movement, headed by Zepp-LaRouche—ed.] for extending the New Silk Road to Southern Europe and the Mediterranean is coming immediately within reach. Greece can—along with the Balkans, Italy, Spain, and Portugal—very soon experience the same economic development that China’s economic miracle has demonstrated over the last 30 years.Prime Minister Tsipras has, with his recent trips to Russia and China, already had extensive conversations about how Greece, which has had long historical and deep cultural ties with both nations, can cooperate with the New Silk Road and the BRICS countries and become part of the new dynamic. Europe should take up Greece’s offer to be a bridge between Europe and the BRICS. However, if the EU responds to the generous Chinese offer by trying to subvert the new Chinese institutions with the old neo-liberal monetarist and failed concepts or with the satanic climate swindle of Commander of the British Empire Hans Joachim Schellnhuber, as it just appeared in the new Encyclical of Pope Francis, then this will mean missing in all likelihood the last chance to save the world before the crash.

Greece Done - Maybe

Greek debt talks collapse, banks close, capital controls in place and gold barley moves. The initial reaction on the Asian open was a quick $15 rise in gold and a 2% drop of the Euro against the US$. There is a sense that a last-minute deal may still be pulled off, but the general mood is one of who cares. I would suggest that there may be more nervousness than is suggested by gold’s price action and the risk to traders lies in more upside pressure. With holidays in Canada and a shortened July 4th week expect high volatility.
By Peter Hug 
Global Trading Director
Kitco Metals Inc.

‘Greece will collapse this week and people will be terrified’ – Jim Rogers

Hundreds gathered in Paris to show their solidarity with Greece, supporting Athens’ resilience in fighting the harsh bailout conditions now being demanded. The protesters were mainly from France’s left-wing parties.The prime minister is calling for Greece to be respected, to make sure it stays in the eurozone. For more RT is joined by Jim Rogers, Financial commentator and co-founder of the Quantum Fund.

GREECE: BANKS & STOCK EXCHANGE CLOSE FOR 6 DAYS; HOARDING GROCERIES, GAS, BUT CAN’T GET CASH

Greeks up a river without a paddle. Don’t wait until it’s too late. Get your money out of banks, stock up on essentials, food, water, gas, etc.
http://news.sky.com/story/1509799/gre…
http://www.nytimes.com/2015/06/29/wor…

Michael Pento: Most Dangerous Time-Since the History of Economics, Every Asset in a Bubble, Except Gold and Silver

Financial expert Michael Pento on gold and silver update, Greek debt crisis and also thinks the biggest danger in the world is overconfidence in central banks. Pento explains, “The biggest bubble out there is an increase in faith that central bankers can save the world. This is why Chinese shares can drop 7 ½% overnight and the Dow can be up 90 points. What do I hear on radio and TV is who cares if Greece leaves the Eurozone because didn’t Mario Draghi say he would do ‘whatever it takes’? Who cares it Chinese shares collapse, because the Peoples Bank of China will just print money. Who cares if inflation in the United States becomes intractable? Didn’t they say Fed Head Janet Yellen and company would just buy all the sovereign debt there is to keep interest rates low? Who cares? The free market always wins, and it will always trump government. That’s why I am so petrified about investing right now. I think we are in the most dangerous time frame we have ever been since the history of economics. I think what is going to replace this misguided spurious faith in central bankers is going to be a renewed interest in hard money-precious metals. We are going to throw out the central bankers, and we are going to universally think it is absolute madness to think we can put our faith in a small unelected, unaccountable group of people. We are going to put our faith back into gold and silver as money. That’s what I am looking forward to. It will be great news to Americ and the economy in the long run.”
Join Greg Hunter as he goes One-on-One with money manager Michael Pento of Pento Portfolio Strategies: http://usawatchdog.com/every-asset-in…

THE ECONOMIC COLLAPSE HAS BEGUN IN GREECE, GREEK BANKS CLOSE/US STOCK FUTURES FALLING!

Link to CNBC/ US Stock Futures Live http://www.cnbc.com/id/17689937
http://www.BPEarthWatch.Com

THE ECONOMIC COLLAPSE HAS BEGUN IN GREECE BREAKING S&P 500 EMINI FUTURES SLIP 1.7% AT THE OPEN Greek banks will not open until July 7 in an attempt to avoid financial panic, after ECB capped the emergency funds keeping them running
TSIPRAS ANNOUNCES CAPITAL CONTROLS
Financial stability council says banks won’t open
ATM limits could be €60/day
Euro getting hammered
US urges Europe to act
Earlier:
ECB caps Greece’s emergency liquidity
ECB statement in full
Queues and confusion in Athens

China-led AIIB development bank holds signing ceremony

China has hosted the signing ceremony of the Asian Infrastructure Investment Bank (AIIB), a new international financial institution set to rival the World Bank and Asian Development Bank.

Delegates from 50 countries signed articles that determine each member's share and the bank's initial capital.
The UK, Germany, Australia and South Korea are among the founding members.
Japan and the US, which oppose the AIIB, are the most prominent countries not to join.
The US has questioned the governance standards at the new institution, which it sees as spreading Chinese "soft power", and tried to persuade others to stay away.
The AIIB, which was created in October by 21 countries, led by China, will fund Asian energy, transport and infrastructure projects.

Australian Treasurer Joe Hockey was the first to sign the articles of association

Analysis: Carrie Gracie, China editor, BBC News

This is not just a diplomatic win for China, it serves an important economic objective too. China wants to move away from building infrastructure at home. Its engineering giants need somewhere else to build ports, roads and cities.
Answer - lend the region the money to pay Chinese companies to build a 21st Century Asia according to a Beijing master plan and with Chinese influence at its core.
This is China under President Xi Jinping flexing its muscle as a major power, but many observers say the move might not have come so soon if the US had been able to lead the reform of existing global financial institutions to make room for China at the top.
After 30 years of breakneck Chinese growth, the distribution of power in those institutions no longer reflects the reality of the global economic landscape.
One British official told me: "If an alien landed on earth they would be puzzled by its international financial institutions as China is grossly underrepresented."

Country delegates gathered at Beijing's Great Hall of the People for the signing ceremony.
Australia was the first country to sign the articles of association creating the AIIB's legal framework, followed by 49 other members. Seven more countries are due to sign by the end of the year.
Most Asian countries and countries from the Middle East and Latin America have joined, with the launch of the Beijing-led bank being hailed as a diplomatic and strategic success for China.
It is one of several institutions China has created to push its own economic agenda, largely driven by frustration over its lack of influence in the big global financial institutions such as the World Bank, says the BBC's Martin Patience in Beijing.
The AIIB will begin with authorised capital of $50bn (£31.8bn), eventually to be raised to $100bn.
China will hold a 30.34% stake making it the largest shareholder of the bank, Reuters quotes China's Finance Ministry as saying.
This would give China 26.06% of the voting rights within the multilateral institution.
India will be the second-biggest shareholder with a possible 10-15% stake, while Russia and Germany will make up the third and fourth biggest member stakes, Reuters news agency reports.
Chinese Finance Minister Lou Jiwei said on Monday he was confident the AIIB could start functioning before the end of the year, according to Reuters.

57 countries set to sign on to China-backed investment bank AIIB

SHANGHAI/BEIJING – One of China’s biggest foreign policy successes ever will take concrete shape Monday when delegates from 57 countries sign an agreement on the Asian Infrastructure Investment Bank (AIIB) in Beijing.
The founding members of the China-backed AIIB will sign articles of agreement that decide each member’s share and the bank’s initial capital.
The multilateral institution, seen as a rival to the Western-dominated World Bank and Asian Development Bank, was initially opposed by the United States but has attracted many prominent U.S. allies including Britain, Germany, Australia and South Korea. Other founding members include most Asian nations and countries from the Middle East and South America.
Japan and the United States are the most prominent nations not to have any representation in the venture. China has said it has left the door open for them to join.

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“It’s a huge diplomatic and strategic win for China,” Malcolm Cook, a senior fellow at the Institute of Southeast Asian Studies in Singapore, said of the AIIB.
“(But) the fact that so many have signed on will mean that the management of the AIIB will be quite complicated. . . . The more countries you have on board, the more interests will be at play and more each member will of course want the institution to serve their own interests.”
One senior Western diplomat in Beijing said China felt it had no choice but to set up its own bank after repeated attempts to reform existing institutions like the International Monetary Fund to take into account China’s role as the world’s second-largest economy were blocked in Washington.
“The United States only has itself to blame,” said the diplomat, from a country which has signed up to the AIIB, speaking on condition of anonymity.
Asian countries are expected to own up to 75 percent of the bank while European and other nations will own the remainder. Each Asian member will then be allotted a share of that 75 percent quota based on their economic size, two Japanese sources have said.
The AIIB will begin with authorized capital of $50 billion. This will eventually be raised to $100 billion.
China is likely to hold a 25-30 percent stake, while India will be the second-biggest shareholder with a possible 10-15 percent , delegates at a meeting to finalize the new bank’s articles of agreement said in May.
Germany plans to take a 4.1 percent stake to become the fourth-biggest member after China, India and Russia, according to a Finance Ministry draft document seen earlier this month.
Australia said last Wednesday it would contribute 930 million Australian dollars ($719.36 million) over five years to become the institution’s sixth largest shareholder.
China says it will not hold veto power within the AIIB, unlike the World Bank where the United States holds a limited veto.
The AIIB is the brainchild of influential Chinese think tank China Center for International Economic Exchanges, which is helmed by former vice premiers and ambassadors, among others. The think tank proposed the creation of the bank in 2013 as an institution that balances China’s political and economic priorities, CCIEE officials said.
“The AIIB has made a lot of progress so far in its preparatory work, but this is only the first step in a long road ahead,” Chinese Finance Minister Lou Jiwei said in a commentary published on the website of the official People’s Daily newspaper Thursday.
“It will require a lot more effort to bring the AIIB up to the standards of global financial institutions.”
Apart from backing the AIIB, China has also pledged billions of dollars to the Silk Road fund and the “One Belt, One Road” initiative, which are also aimed at funding infrastructure to increase trade and connectivity between Europe and Asia.

The financial enigma resolved — A debt-money system

没

“The Money Myth Exploded” was one of the first articles of Louis Even, and remains one of the most popular to explain how money is created as a debt by private banks. It is available in the form of an 8-page leaflet (tabloid format) that you can order from the “Michael” office, in several languages: English, French, Spanish, Italian, German, Polish, Portuguese.

1. Shipwreck survivors

An explosion had blown their ship apart. Each one grasped the first bit of wreckage that came to hand. And when it was over, there were five left, five huddled on a raft which the waves carried along at their will. As for the other victims of the disaster, there was no sign of them.

Hour after long hour their eyes searched the horizon. Would some passing ship sight them? Would their make-shift raft finds its way to some friendly shore?

Suddenly a cry rang out:  “Land! Look! Over there, in the direction the waves are carrying us!”

And as the vague silhouette proved itself to be, in fact, the outline of a shore, the figures on the raft danced with joy.

They were five. There was Frank, the carpenter, big and energetic. It was he who had first cried, “Land!”.

Then Paul, a farmer. You can see him, front and left in the picture, on his knees, one hand against the floor, the other gripping the mast of the raft.

Next is Jim, an animal breeder; he's the one in the striped pants, kneeling and gazing in the direction of land.

Then there is Harry, an agriculturist, a little on the stout side, seated on a trunk salvaged from the wreck.

And finally Tom, a prospector and a mineralogist; he is the merry fellow standing in the rear of the picture with his hand on the carpenter's shoulder.

2. A providential island

To our five men, setting foot on land was like returning to life from the grave.

When they had dried and warmed themselves their first impulse was to explore this little island on to which they had been cast, far from civilization.

A quick survey was sufficient to raise their spirit. The island was not a barren rock. True enough, they were the only men on it at the moment. But judging from the herds of semi-domesticated animals they encountered, there must have been men here at some time before them. Jim, the animal breeder, was sure he could completely domesticate them and put them to good service.

Paul found the island's soil, for the most part, to be quite suitable for cultivation.

Harry discovered some fruit trees which, if properly tended, would give good harvests.

Most important were the large stands of timber embracing many types of wood. Frank, without too much difficulty, would be able to build houses for the little community.

As for Tom, the prospector, well, the rock formations of the island showed signs of rich mineral deposits. Lacking the tools, Tom still felt his ingenuity and initiative could produce metals from the ores.

So each could serve the common good with his special talent. All agreed to call the place Salvation Island. All gave thanks to Providence for the reasonably happy ending to what could have been stark tragedy.

3. True wealth

Here are the men at work.

The carpenter builds houses and makes furniture. At first they find their food where they can. But soon the fields are tilled and seeded, and the farmer has his crops.

As season followed season this island, this heritage of the five men, Salvation Island, became richer and richer.

Its wealth was not that of gold or of paper bank notes, but one of true value; a wealth of food and clothing and shelter, of all the things to meet human needs.

Each man worked at his own trade. Whatever surpluses he might have of his own produce, he exchanged for the surplus products of the others.

Life wasn't always as smooth and complete as they could have wished it to be. They lacked many of the things to which they had been accustomed in civilization. But their lot could have been a great deal worse.

Besides, all had experienced the depression in Canada. They still remembered the empty bellies side by side with stores crammed with food.

At least, on Salvation Island, they weren't forced to see the things they needed rot before their eyes. Taxes were unknown here. Nor did they go in constant fear of seizure by the bailiff. They worked hard but at least they could enjoy the fruits of their toil.

So they developed the island, thanking God and hoping for the day of reunion with their families, still in possession of life and health, those two greatest of blessings.

4. A serious inconvenience

Our men often got together to talk over their affairs.

Under the simple economic system which had developed, one thing was beginning to bother then more and more; they had no form of money. Barter, the direct exchange of goods for goods, had its drawbacks. The products to be exchanged were not always at hand when a trade was discussed. For example, wood delivered to the farmer in winter could not be paid for in potatoes until six months later.

Sometimes one man might have an article of considerable size which he wished to exchange for a number of smaller articles produced by different men at different times.

All this complicated business and laid a heavy burden on the memory. With a monetary system, however, each one could sell his products to the others for money. With this money he could buy from the others the things he wanted, when he wished and when they were available.

It was agreed that a system of money would indeed be very convenient. But none of them knew how to set up such a system. They knew how to produce true wealth - goods. But how to produce money, the symbol of this wealth, was something quite beyond them. They were ignorant of the origin of money, and needing it they didn't know how to produce it. Certainly, many men of education would have been in the same boat; all our governments were in that predicament during the ten years prior to the war. The only thing the country lacked at that time was money, and the governments apparently didn't know what to do to get it.

5. Arrival of a refugee

One evening, when our boys were sitting on the beach going over their problem for the hundredth time, they suddenly saw approaching a small boat with a solitary man at the oars.

They learned that he was the only survivor of a wreck. His name: Oliver.

Delighted to have a new companion, they provided him with the best that they had, and they took him on an inspection tour of the colony.

“Even though we're lost and cut off from the rest of the world,” they told him, “we haven't too much to complain about. The earth and the forest are good to us. We lack only one thing — money. That would make it easier for us to exchange our products.”

“Well, you can thank Providence,” replied Oliver, “because I am a banker, and in no time at all, I'll set up a system of money guaranteed to satisfy you. Then you'll have everything that people in civilization have.”

A banker!... A BANKER!... An angel coming down out of the clouds couldn't have inspired more reverence and respect in our men. For, after all, are we not accustomed, we people in civilization, to genuflect before bankers, those men who control the lifeblood of finance?

6. Civilization's god

“Mr. Oliver, as our banker, your only occupation on this island will be to look after our money; no manual labour.”

“I shall, like every other banker, carry out to complete satisfaction my task of forging the community's prosperity.”

“Mr. Oliver, we're going to build you a house that will be in keeping with your dignity as a banker. But in the meantime, do you mind if we lodge you in the building that we use for our get-togethers?”

“That will suit me, my friends. But first of all, unload the boat. There's paper and a printing press, complete with ink and type, and there's a little barrel which I exhort you to treat with the greatest care.”

They unloaded everything. The small barrel aroused intense curiosity in our good fellows.

“This barrel,” Oliver announced, “contains a treasure beyond dreams. It is full of... gold!”

Full of gold! The five all but swooned. The god of civilization here on Salvation Island! The yellow god, always hidden, yet terrible in its power, whose presence or absence or slightest caprice could decide the very fate of all the civilized nations!

“Gold! Mr. Oliver, you are indeed a great banker!”

“Oh august majesty! Oh honorable Oliver! Great high priest of the god, gold! Accept our humble homage, and receive our oaths of fidelity!”

“Yes, my friends, gold enough for a continent. But gold is not for circulation. Gold must be hidden. Gold is the soul of healthy money, and the soul is always invisible. But I'll explain all that when you receive your first supply of money.”

7. The secret burial

Before they went their separate ways for the night, Oliver asked them one last question.

“How much money will you need to begin with in order to facilitate trading?”

They looked at one another, then deferentially towards the banker. After a bit of calculation, and with the advice of the kindly financier, they decided that $200 each would do.

The men parted, exchanging enthusiastic comments. And in spite of the late hour, they spent most of the night lying awake, their imaginations excited by the picture of gold. It was morning before they slept.

As for Oliver, he wasted not a moment. Fatigue was forgotten in the interests of his future as a banker. By dawn's first light, he dug a pit into which he rolled the barrel. He then filled it in, transplanting a small shrub to the spot about which he carefully arranged sod. It was well hidden.

Then he went to work with his little press to turn out a thousand $1 bills. Watching the clean new banknotes come from his press, the refugee turned banker thought to himself:

“My! How simple it is to make money. All its value comes from the products it will buy. Without produce, these bills are worthless. My five naive customers don't realize that. They actually think that this new money derives its value from gold! Their very ignorance makes me their master.”

And as evening drew on, the five came to Oliver — on the run.

8. Who owns the new money?

Five bundles of new banknotes were sitting on the table.

“Before distributing the money,” said the banker, “I would like your attention.

“Now, the basis of all money is gold. And the gold stored away in the vault of my bank is my gold. Consequently, the money is my money. Oh! Don't look so discouraged. I'm going to lend you this money, and you're going to use it as you see fit. However, you'll have to pay interest. Considering that money is scarce here, I don't think 8% is unreasonable.”

“Oh, that's quite reasonable, Mr. Oliver.”

“One last point, my friends. Business is business, even between pals. Before you get the money, each of you is going to sign a paper. By it you will bind yourselves to pay both interest and capital under penalty of confiscation of property by me. Oh! This is a mere formality. Your property is of no interest to me. I'm satisfied with money. And I feel sure that I'll get my money, and that you'll keep your property.”

“That makes sense, Mr. Oliver. We're going to work harder than ever in order to pay you back.”

“That's the spirit. And any time you have a problem, you come and see me. Your banker is your best friend. Now here's two hundred dollars for each one of you.”

And our five brave fellows went away, their hands full of dollar bills, their heads swimming with the ecstasy of having money.

9. A problem in arithmetic

And so Oliver's money went into circulation on the island. Trade, simplified by money, doubled. Everybody was happy.

And the banker was always greeted with unfailing respect and gratitude.

But now, let's see... Why does Tom, the prospector, look so grave as he sits busily figuring with a pencil and paper? It is because Tom, like the others, has signed an agreement to repay Oliver, in one year's time, the $200 plus $16 interest. But Tom has only a few dollars in his pocket, and the date of payment is near.

For a long time he had wrestled with this problem from his own personal point of view, without success. Finally, he looked at it from the angle of the little community as a whole.

“Taking into consideration everyone on the island as a whole,” he mused, “are we capable of meeting our obligations? Oliver turned out a total of $1000. He's asking in return $1080. But even if we bring him every dollar bill on the island, we'll still be $80 short. Nobody made the extra $80. We turn out produce, not dollar bills. So Oliver can take over the entire island, since all the inhabitants together can't pay him back the total amount of the capital and the interest.

“Even if a few, without any thought for the others, were able to do so, those others would fall. And the turn of the first spared would come eventually. The banker will have everything. We'd better hold a meeting right away and decide what to do about it.”

Tom, with his figures in his hand, had no difficulty in proving the situation. All agreed that they had been duped by the kindly banker. They decided upon a meeting at Oliver's.

(continued on page 2)

Varoufakis: If Europe Wants to Humiliate Greece, Do We Need Such Europe?

If Europe is going to stop its bailout program for Greece in order to humiliate the country’s government, a question remains open whether Athens needs such a Europe, Greek Finance Minister Yanis Varoufakis said in an interview with the German newspaper Bild.

Varoufakis made the statement answering a question about Greece’s future in case if creditors would deny the extension of financing. Among possible scenarios suggested by the newspaper were the introduction of capital controls and Greece’s withdrawal from the Eurozone.

“If Europe allows this terrible turn of events, just to humiliate our government, Europeans will have to ask themselves […]: Do we need such a Europe?” the Greek finance minister said.

Greek Finance Minister Yanis Varoufakis recalled that Greece has made its proposals to creditors, and currently is waiting for the EU to show its “goodwill”.

“The EU leaders must act. German Chancellor Angela Merkel, representing the most important country, is holding the key in her hand. I hope she uses it,” Varoufakis stated.

He noted that Greece is open to new proposals from creditors and that it is ready to support them if they are “significantly better” than previous. At the same, he stressed that the Greek side has already placed all its ideas on the negotiating table and that it is not planning to submit any new offers.The agreement with creditors was expected to be reached on Saturday, but the attempt failed when Greek Prime Minister Alexis Tsipras announced a referendum, which is set to take place on July 5, to decide whether or not to accept the creditors’ conditions and continue the policy of austerity. Source: Sputnik, 28 June 2015

What are the economic consequences of the UK leaving the European Union?

by Shaun Richards
A feature of these times is that the news flow is dominated by discussions about the Greek crisis. In spite of a deal being “close” and then “closer than close” we find a situation where there is still dissent and plenty of name calling. However there is another issue on the horizon for Europe which is the planned referendum in the UK on the subject of continued (or not) membership of the European Union. Accordingly some 40 years or so after they voted to join what was then a free trade area called the European Economic Community or Common Market UK electors seem set to get the opportunity to vote on what has now become a federal project called the European Union unrecognisable from those days. The vote has acquired its own acronym of Brexit which seems a little unfair on Northern Ireland which is in the UK but not Great Britain. Let us take a look at the economics.
The UK establishment
This has continued to run various unsubstantiated lines of which the most prominent has been “3 million jobs depend on Europe”. As Europe is our largest trading partner of course plenty of jobs depend on business there just like they did before we joined the EEC back in 1973. As we traded with Europe before 1973 presumably we could post 2017 and any Brexit. It is of course possible that some jobs will be lost but let me give you an area where it is certain.That is of UK politicians and officials who work in the European parliament and institutions who will lose well paid jobs sometimes which are tax-free and which frequently come with substantial expense accounts. This ,makes me wonder if the UK establishment has confused its well-being and circumstances with ours.
The other side of the argument is that the UK would have changed European policy if it had “engaged” more with the project. This has been expressed by Martin Sandbu in the Financial Times and this is the argument.

The important question, therefore, is how the UK would have changed the eurozone’s policies from the inside.

You may note that the sands have shifted here as the FT’s economics leader writer looks to justify its long-standing support for the Euro project. Apparently everything would have been better.

The BoE understood the need for extraordinarily aggressive policy much better than its counterpart in Frankfurt.
So in the fiscal sphere, too, British euro membership would have tilted policy in the direction of growth. And the influence could have been substantial.

There you have it as we are so clever in the UK we could have fixed both monetary and fiscal policy! Rather against the reality of the policy errors of the Bank of England which gets a lot of rose-tinting here.
There are quite a lot of issues with this. Firstly had we been in the Euro and the lower interest-rates there had been applied to our housing market then it would have had a boom and bust which would have made the ones in Ireland and Spain look like an afternoon tea party. As an example post 9/11 UK Base Rates fell to a low of 3.5% whereas the ECB cut to 2%. Never mind Greece how about paying for a UK bailout? That may well have broken the Euro. Also as an implicit part of our policy response under Bank of England Governor Mervyn King was for the UK Pound £ to fall and this fall was if we use our rule of thumb a larger monetary stimulus than the Base Rate cuts we have a problem if we are in the Euro do we not?
Life is rather different if you look at the facts rather than cherry-picking from a wish list. But of course the Financial Times is writing to itself with this bit.

If you were so misguided as to have supported the euro then, they argue, surely we cannot take seriously your argument for continued EU membership today.

The economics leader writer of the FT seems to be a little short of knowledge of economics and economic history. Perhaps he might take a look at 1992 when we left the forerunner of the Euro called the ERM in a rather undignified fashion.
What about trade?
The simple fact is that the UK trades on a large-scale with Europe and both not just one side benefits from that. This is reinforced by the fact that we have a balance of payments deficit with Europe and in particular a large goods or balance of trade deficit. Here is the data from UK Customs and remember this is just one month.

EU Exports for April 2015 are £11.0 billion….. EU Imports for April 2015 are £17.6 billion……..EU trade is a net importer this month, with imports exceeding exports by £6.6 billion.

I do like the way they put “this month” as I cannot remember when we last had a trade surplus with the European Union. But if we look at individual countries we bought some £2.6 billion more goods from Germany than we exported in April alone. Thus any closure of trade with Germany would have Audi.BMW,Bosch,Porsche and Volkswagen knocking on Chancellor Merkel’s door in very short order. Or let me be more realistic ringing her mobile phone as I am sure they will have the number.
In the unlikely event that such numbers do not influence Germany there is always the £1 billion goods deficit with the Netherlands, the £600 million deficit with Belgium and Luxembourg, the £570 million deficit with Italy or the £400 million goods deficit with France in April to consider.
If you want a longer-term perspective here is the latest quarterly data is below.

By area, the UK’s deficit with the EU widened by £0.2 billion to £21.3 billion in the three months to April 2015,

They are not going to end that are they? At a time of economic difficulty the UK has been a substantial buyer of European and Euro area goods something which we seem to get very little credit for.
Just to be clear these are numbers for goods. We do have a services surplus but we are very vague about from where (although we have monthly numbers the actual data is quarterly and annual). I regularly discuss the fact that this is an embarrassment in an era of information technology but overall we remain solidly in deficit.
Also to sweep up the whole subject if trade is a benefit for all as argued why would anybody want to stop it?
Looking further afield
On the upside there would be clear gains from the UK moving its emphasis to the rest of the world. If we just look at the subcontinent there is the fast growing India with which we have traditional and indeed cultural links (tea,cricket and increasingly I gather football). Or if we consider China I note that it is playing a long-term game based on resources whereas we have de-emphasised links with Canada and Australia which of course are stacked with them. In a world where Australia sees threats merging we could do a lot worse than actually putting some planes on one of our upcoming aircraft carriers and sending it on a tour to Australia. After all the US defence umbrella is not what it was.
Some numbers from Open Europe
They did an analysis of the situation and it is the scale of the numbers I think which are important here.

In a worst case scenario, where the UK fails to strike a trade deal with the rest of the EU and does not pursue a free trade agenda, Gross Domestic Product (GDP) would be 2.2% lower than if the UK had remained inside the EU.+
In a best case scenario, where the UK strikes a Free Trade Agreement (FTA) with the EU, pursues very ambitious deregulation of its economy and opens up almost fully to trade with the rest of the world, UK GDP would be 1.6% higher than if it had stayed within the EU.

Some care is needed as these numbers represent the impact a fair way down the road as they are for 2030 but they are quite low considering all the hue and cry and they center on zero pretty much! So it does not matter? I think that overstates things but we are obsessing one more time about a narrow geographical issue.
Comment
One thing I would like to make clear is that many of the countries in Europe have long been our friends. Portugal is the oldest ally of England and Wales and I am putting it like that because the alliance even predates the union with Scotland. Also I recall messages to this blog from Greeks back in the early days of their crisis pointing out that British troops had fought for them back in World War Two. Thus I am bemused by the idea that somehow the day after Brexit we would have moved our island into the middle of the Atlantic rather than being next to Europe. Why could we not be friends and do a deal? After all we are always likely to be a disruptive influence to a federal Europe with our economy tilted towards housing and banking.
The other side of the argument that we can start to “really engage” with Europe and help to reform it has as a problem the evidence of the last 40 years. It is silly to argue that everything that has come from there has been bad but exactly where have we made our voice heard? Indeed when this came up some 30 years ago on Yes Minister the apocryphal civil servant Sir Humphrey Appleby put it very differently.

Sir Humphrey: Minister, Britain has had the same foreign policy objective for at least the last five hundred years: to create a disunited Europe. In that cause we have fought with the Dutch against the Spanish,with the Germans against the French,with the French and Italians against the Germans, and with the French against the Germans and Italians. Divide and rule, you see. Why should we change now, when it’s worked so well?

Later he went on..

Hacker: But surely we’re all committed to the European ideal?
Sir Humphrey: [chuckles] Really, Minister.
Hacker: If not, why are we pushing for an increase in the membership?
Sir Humphrey: Well, for the same reason. It’s just like the  United Nations, in fact; the more members it has, the more arguments it can stir up, the more futile and impotent it becomes.
Hacker: What appalling cynicism.
Sir Humphrey: Yes… We call it diplomacy, Minister.

Was he right?